Penalizing Marriage for the Poor

This article appears in the Summer 2018 issue of The American Prospect magazine. Subscribe here.

The tax code has long punished marriage. A married couple filing a joint return stood to pay a slightly higher rate than two individuals with the same incomes would pay if they were filing separately, especially if the incomes were close to equal.

Early on in the tax reform process, House Speaker Paul Ryan bragged, “We’re going to get rid of the marriage penalty.” But the 2017 Republican Tax Act achieved that goal only for middle-income Americans, leaving low-income households penalized for doing exactly what conservatives admonish them to do—get married and start a family.

Prior to the Tax Act, many couples found themselves in a higher tax bracket after getting married. In addition, many means-tested benefits like the Earned Income Tax Credit and the Child Tax Credit are designed around a similar assumption—that the husband would earn more than the wife—and so the income phase-out for the EITC for a married couple is steeper than for an individual. This means lower-income couples could incur a double jeopardy: marriage could both bump them into a higher tax bracket, and eliminate their means-tested benefits.

The Tax Act fixed one of these two problems—and it was the one affecting middle-income households. Now, all the brackets for married couples are neatly double the individual filing brackets, except for the very highest-earning couples whose income combines to over $600,000. This means that the marriage tax penalty for middle--income households earning between $40,000 and $150,000 has been mostly eliminated, according to analysis by the Tax Foundation.

But for low-income couples, a hefty marriage tax penalty remains. Marriage can make them ineligible for the EITC and the Child Tax Credit. For households where both partners combined earn between $30,000 and $60,000 and have children, their tax bills can be increased by thousands of dollars by marriage. This penalty is larger the more children there are in the household.

Conservatives have long argued that the “success sequence”—the pattern young people should follow if they want to achieve the American dream of a middle-class income and a white picket fence—is going from high school to college to marriage to a family. If you want to be middle-class, get married and have a family, preached the high-minded conservative. And yet, the marriage tax penalty is another example of an instance where actual Republican public policy betrays the conservative principles they preach.